Chapter Ƕ: Ļe Debate about the Efficiency of a Socialist Economy ȇȂprinciple, to breed winged elephants. Anyone who doubts this can find out
how from me later.
Some socialist writers, notably Maurice Dobb, find it hard to take seri-
ously the suggestion that plant managers should “play an elaborate game
of bidding for capital on a market, instead of transmitting the information
(about productivities) direct to some planning authority” (ȀȈȃȅ, p.Ȃǿȁ).
Dobb and his school take refuge in a large measure of central planning of
the Soviet type. Paul Sweezy, also, favors comprehensive planning; indeed,
he agrees with H.D. Dickinson that centralization is all but inevitable
under socialism. Yet Sweezy (ȀȈȃȈ, pp.ȁȂȁ–ȁȂȈ) cites Lange’sOn the Eco-
nomic Ļeory of Socialism“as having finally removed any doubts about the
capacity of socialism to utilize resources rationally,” and he seems not to
realize the inconsistency of his own position.
Since the centralized-planning approach is unquestionably vulnerable
to the criticisms advanced long ago by Mises, I find it a peculiarly unin-
teresting form of socialism. Ļerefore, let’s go on to an extremely decen-
tralized form of socialism.
Abba Lerner, inĻe Economics of Control(ȀȈȃȆ), and Lerner and Oskar
Lange, in a pamphlet published inȀȈȃȃ, advocate “free enterprise.” By this,
Lerner and Lange mean that both government and private entrepreneurs
should be free to enter any line of business not reserved to the govern-
ment. Perhaps this arrangement would be the famous “mixed economy”
rather than full-blown socialism. Franco Modigliani (ȀȈȃȆ, pp.ȃȃȀ–ȄȀȃ)
advocates a decentralized socialism in a lengthy article published inȀȈȃȆ,
though he does not go nearly as far towards so-called “free enterprise” as
do Lerner and Lange.
Lerner and Lange recognize that
what the manager of every factory needs is some simple indication
of the usefulness for alternative production of each of the goods that
he might use. Such an indication of the alternative productivity of
each factor is provided by itsprice.For this we must have markets
for the factors in which the price equates the supply to the demand,
with appropriate rules governing the demand for the factors of produc-
tion by the various managers in charge of the public enterprises. (ȀȈȃȃ,
p.Ȁȇ)Incidentally, I cannot help but interpret that quotation from two of
the most competent socialist writers as anything less than an outright
concession of at least two-thirds of Professor Mises’s original argument.